Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Strategic Management: Text and Cases, 4e 8 Entrepreneurial Strategy and Competitive Dynamics

8 - 2 Recognizing Entrepreneurial Opportunities Entrepreneurship – new value creation New value can be created in many different environments Opportunities Resources

8 - 3 Opportunity Analysis Framework Adapted from Exhibit 8.2 Opportunity Analysis Framework Sources: Based on J. A. Timmons and S. Spinelli, New Venture Creation, 6th ed. (Burr Ridge, IL: McGraw-Hill/Irwin, 2004); and W. D. Bygrave, “The Entrepreneurial Process,” in W. D. Bygrave, ed., The Portable MBA in Entrepreneurship, 2nd ed. (New York:Wiley, 1997).

8 - 4 Entrepreneurial Opportunities Opportunities come from many sources -Start-ups -Established firms Different Phases

8 - 5 Entrepreneurial Opportunities Opportunities come from many sources -Start-ups -Established firms Different Phases of Opportunity Recognition -Discovery phase -Opportunity evaluation phase -Resource Evaluation phase

8 - 6 Characteristics of Good Opportunities Attractive AchievableDurable Value creating Good Business Opportunity Before launching opportunity as a business Consider the resources available to undertake it Consider the characteristics of the entrepreneur pursuing it

8 - 7 Entrepreneurial Resources Financial resources Later-stage (not seed) financing Human capital Social capital Government resources

8 - 8 Entrepreneurial Leadership Launching a new venture requires a special kind of leadership Characteristics needed (not exclusive) -Vision -Dedication and drive -Commitment to excellence

8 - 9 Entrepreneurial Leadership Vision may be entrepreneur’s most important asset Dedication and drive are reflected in hard work To achieve excellence, venture founders and small business owners must

Ten Management Lessons from a young entrepreneur 1.Here are It’s all about perseverance 2.Understand the value of mentorship and teamwork 3.Stick to your niche 4.Stay on top of news that affects your clients 5.Communication is key 6.Capitalization is crucial 7.Communication unwavering honesty and integrity 8.Stay on top of the curve 9.Take ownership in your clients’ success 10.Never stop marketing Source: Pierce, Sarah. “10 Management Lessons From a Young Entrepreneur,” December 17, 2003.

Entrepreneurial Strategy What determines the best strategy for the enterprise? What are the various tools and techniques to determine strategic choices?

Entry Strategies Getting a foothold in the market Pioneering new entry Imitative new entry Adaptive new entry

Generic Strategies How new ventures can achieve competitive advantages? What is their

Model of Competitive Dynamics Sources: Adapted from Chen, M-J Competitor analysis and interfirm rivalry: Toward a theoretical integration. Academy of Management Review, 21(1): ; Ketchen, D.J., Snow, C. C., Hoover, V.L Research on competitive dynamics: Recent accomplishments and future challenges. Journal of Management, 30(6): ; and Smith, K.G., Ferrier, W.J., & Grimm, C.M King of the hill: Dethroning the industry leader. Academy of Management Executive, 15(2):

Strategic and Tactical Competitive Actions Entering new markets New product introductions Changing production capacity Mergers/Alliances Price cutting (or increases) Product/service enhancements Increased marketing efforts New distribution channels Actions Strategic Actions Tactical Actions Exhibit 8.8 – Strategic and Tactical Competitive Actions

Central Questions What are you doing? Why? How? Why You? What is your Magic?